Non-Communication of Acceptance of Audit with Resigning Auditor: ICAI Penalises Two CAs with Rs. 1.25 Lakhs Fine
The penalties were levied following hearings conducted by the Board of Discipline (BoD)
Non-Communication of Acceptance of Audit with Resigning Auditor: ICAI Penalises Two CAs with Rs. 1.25 Lakhs Fine
Non-Communication of Acceptance of Audit with Resigning Auditor: ICAI Penalises Two CAs with Rs. 1.25 Lakhs Fine
The Institute of Chartered Accountants of India (ICAI) has imposed fines totaling Rs. 1.25 lakhs on two Chartered Accountants (CAs) for professional misconduct related to the non-communication of acceptance of audit assignments with resigning auditors. The penalties were levied following hearings conducted by the Board of Discipline (BoD) under Section 21A(3) of the Chartered Accountants Act, 1949.
In the first case, a CA was found guilty of violating Item (8) of Part I of the First Schedule to the Chartered Accountants Act, 1949. The complaint was filed by another CA, who had resigned as the statutory auditor of a private limited company in October 2018 due to non-cooperation from the company. Despite the resignation, the respondent CA accepted the audit assignment for the financial years 2017-18 and 2018-19 without seeking a No Objection Certificate (NOC) from the complainant or ensuring the payment of outstanding audit fees. The BoD imposed a fine of Rs. 25,000 on the respondent CA for his misconduct.
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In the second case, another CA was penalized with a fine of Rs. 1 lakh for accepting the statutory audit of a company without communicating with the previous auditor. The complainant had outstanding audit fees from the company, which were not settled before the respondent CA took over the audit assignment for multiple financial years. The BoD found the respondent CA guilty of professional misconduct under the same provision of the Act.
Both CAs were given opportunities to present their cases during hearings held via video conferencing. The BoD emphasized the statutory requirement for incoming auditors to communicate in writing with outgoing auditors before accepting audit assignments. The failure to do so undermines professional ethics and accountability within the auditing profession.
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